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  1. 1. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224 The Interrelationships Among Trust, Perceived Risk, And Behavioral Intention For Technology Acceptance And Internet Banking P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi Research Associate Institute of Public Enterprise Hyderabad Research Associate Institute of Public Enterprise Hyderabad Geethanjali College of Engineering and Technology, HyderabadAbstract Consisting of many members empirical perceived risk, and behavioral intention Corbitt et al.,studies on internet banking services (IBS) 2003; Featherman and Pavlou, 2003; Gefen andadoption have focused on perceived risk or trust Straub, 2004; Littler and Melanthiou, 2006;or behavioral intention; but rarely have they Mukherjee and Nath, 2003; Yousafzai et al., 2003).combined these concepts and used empirical Research has shown that “risk and trust areevidence to investigate the relationship. This study inseparable components in decision-making”aims to contribute to this field by looking (Morrison and Firmstone, 2000, p. 600). Researcherssimultaneously at the roles of trust, perceived risk, suggest that to place trust on a party involves risk-and behavioral intention on consumers’ IBS usage taking and behavioral intention in decision-makingintention. An integrated model explaining the (Morrison and Firmstone, 2000). Deutsch (1960)interrelationships among trust, perceived risk and identifies trust as an individual‟s confidence in thebehavioral intention is developed for technology intentions and capabilities of a relationship partneracceptance and internet banking. The research and the belief that a relationship partner wouldwas conducted on a sample of 432 young Chinese behave as one hoped. Mitchell (1999, p. 174) hasconsumers who can be classified as IBS early suggested that “perceived risk is an antecedent foradopters. The quantitative findings are enhanced trust to be operative and an outcome of trust buildingby the analysis of extensive qualitative data is a reduction in the perceived risk and behavioralproviding unique insights into this market. Results intention of the transaction or relationship”, trust canindicate that there is a significant relationship be used as a risk reliever. Therefore, trust,perceivedbetween trust, perceived risk and that both are risk, and behavioral intention should be studiedcrucial in explaining the technology acceptance simultaneously in situations such as financial servicesand internet banking behavioral intention. and banking, in particular where innovativeFurthermore, trust in the bank is fundamental not technology (e.g. the internet) is used possiblyonly to reducing risk perceptions of IBS in general increasing risk perceptions further. It is thereforebut also to building trust in the banks’ perhaps surprising that many such investigationscompetence in terms of IBS activity. This research have not yet occurred. This research seeks to test anadds value to existing studies of online banking, integrated model of risk ,trust,and intention wherewhich largely focus on trust, risk and intention perceived risk is conceptualised as an antecedent ofseparately. In addition, it enables us to contribute trust, thereby hopefully enabling better prediction ofto the current literature on the emerging Chinese customers‟ attitudes and behaviours in an emergingIBS market, which is largely under-researched. market. The financial and banking sector has been experiencing enormous change recently:the FSA hasKeywords Trust, Financial risk, perceived risk, failed to regulate the industry and the result hasbehavioral intention, Internet, Banking, Consumers, negatively influenced consumers‟ trust in the bankingChina, TAM system. In the UK, trust in banks has dropped from 47 percent to 31 per cent and greater regulation hasIntroduction been recommended (Bakker, 2009). The impact of Trust, perceived risk, and behavioral such a shift in perception is pervasive as it opens upintention are pervasive concepts that influence the issue of distrust globally. The lack of trust canconsumer behaviour in the financial services sector. influence the way in which consumers see banks andWhilst an extensive body of literature focuses on how financial institutions and in particular consumers‟either trust or perceived risk or behavioral intention attitudes to new forms of service delivery via theinfluences consumers‟ decisions regarding the use of internet.Internet banking services (IBS) not onlythe internet for general shopping or online banking, allow customers to carry out a range of bankingthe relationship among trust, perceived risk, and activities, such as managing bank accounts andbehavioral intention is not always straightforward nor transactions without leaving their desks (Weir et al.,is its potential influence (see for a review on trust, 2006), but is also a very cost-efficient way for banks to provide their customer services (Yakhlef, 2001). 208 | P a g e
  2. 2. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224However, it has been noted that customer adoption of on him. There is an emerging body of literatureinternet banking has not yet reached the level, which related to trust in e-commerce which is derived frommost banks would like to see (Calisir and Gumussoy, traditional research on trust (Papadopoulou, Andreou,2008). Common concerns are identified such as the Kanellis, & Martakos, 2001). These studiesperformance and security of banking transactions, as contribute only partially due to the relative newnesswell as the confidentiality of personal account data and complexity of this issue. Current literature in e-(Aladwani, 2001; Aldas-Manzano et al., 2009; commerce offers very little insight about how trust isFurnell, 2004). These concerns increase the level of developed and maintained (Ndubisi & Wah, 2005).perceived riskand behavioral intention which is Trust plays an important role in electronic orfurther exacerbated by declining levels of trust in traditional transactions, it is critical for establishing abanks.To build profitable long-term relationships long term business relationship, especially if partnerswith consumers, financial institutions need to know are located in different places where rules andhow trust, perceived risk, and behavioral intention regulations vary, many partners often do not knowinfluence consumer‟s behaviour. However, relatively each other and have less control over data while theylittle attention has been dedicated to investigate how are being transferred (Roy, Dewit, & Aubert, 2001).both concepts contribute to consumers‟ willingness touse IBS. Such integration provides us with a unique PERCEIVED SECURITYperspective on how the social construct (trust) and Consumers perceive a greater uncertaintypsychological concept (perceived risk) influence when a transaction is carried out using the Internetconsumers‟ IBS adoption. Perceived risk is identified and are very concerned about security in the onlineas a major barrier, discouraging consumers from context (Casaló, Flavián, & Guinalíu, 2007).considering using banking services on the internet Perceived usefulness and ease of use may not(Black et al., 2001). Social psychologists would accurately reflect the motivation of users of onlineargue that trust and behavioral intention may act as a applications under security threats. Using onlinemajor risk reducer to help overcome this barrier. This applications under security threats is associated withresearch explores the IBS market in an emerging risk. For this reason TAM was extended to includecountry, China, and adopts an integrated lens through perceived security of using online applications.combining the concepts of trust and perceived risk. Consumers associate security risk with loss of moneyGiven the huge growth potential of China in cash or through credit cards (Aldás-Manzano,(Worthington, 2003), and the paucity of other Lassala-Navarré, Ruiz-Mafé, & Sanz-Blas, 2009).relevant studies (e.g. Laforet and Li, 2005), our Previous research in countries with different levels ofobjectives are: e-commerce adoption shows that perceived security To identify the relative importance of risk is an important predictor of Internet bankingrisk dimensions in relation to IBS adoption by adoption.Chinese consumers. To examine the role of trust in relation Behavioral Intentionto Chinese IBS adoption. Behavioral intention (BI) is defined as a To explore the relationships between person‟s perceived likelihood or “subjectiverisk, trust and intention within the current context. probability that he or she will engage in a given To suggest appropriate trust building behavior” (Committee on Communication forstrategies to encourage increased adoption of IBS Behavior Change in the 21st Century, 2002, p. 31).amongst Chinese consumers. BI is behavior-specific and operationalized by direct questions such as “I intend to [behavior],” with LikertTRUST scale response choices to measure relative strength of It is most frequently cited in the literature intention. Intention has been represented inand one of the most common constructs investigated measurement by other synonyms (e.g., “I plan toin relationship marketing studies (Samiee & Walters, [behavior]”) and is distinct from similar concepts2003). Trust is central to the development of such as desire and self-prediction (Armitage &successful service relationships in business-to- Conner, 2001). Ajzen (1991) argued that BI reflectsbusiness markets and for the achievement of how hard a person is willing to try, and howcustomer loyalty (Rauyruen & Miller). In a business- motivated he or she is, to perform the behavior.tocustomer environment, trust between parties isestablished very differently from business-to- Technology Acceptance Theory (TAM)business environments. In a business-to-customer Davis (1989) developed technologycontext the relationship is often very short term and acceptance model (TAM) which has become one ofmore transaction focused (Bennett & Barkensjo, the most cited model in information systems2005) unlike in business-to-business, where the research. TAM states that user adoption of a givenrelationships are of a long term. Benevolence information system can be explained by the users‟requires being interested in the partners‟ welfare by intention to use the system, which in turn isnot taking actions that would have a negative impact determined by the users‟ beliefs about the system. 209 | P a g e
  3. 3. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224The model assumes that attitudes about a system plethora of research available on role of perceived(operationalized as “perceived usefulness” and risk in affecting the individual behavior towards“perceived ease of use”), will impact the motivation internet banking use (Cheng et al., 2006; Gerrard and(intention) to use a system, which in turn leads to Cunningham, 2003; Jayewardene and Foley, 2000;actual usage. The model maintains that technology Littler and Melanthiou, 2006; Manzano et al., 2009;acceptance is determined by the users‟ perceived ease Sathye, 1999; Suganthi et al., 2001); there is scarcityof use, which is the degree to which a user believes of studies which have focused on technologythat using a new information system would be free of acceptance model (refer to Table I). So, we haveeffort; and perceived usefulness, which is the degree made an attempt to integrate perceived risk withto which a user believes that using a new information TAM. Table I clearly highlights that in spite ofsystem would enhance task performance. These two extensive empirical support existing TAM is notdeterminants in turn affect the users‟ attitude toward addressing the perceived risk element, which hasusing the information systems. TAM concepts are been identified as an important element of diffusionsuitable for online service systems research since of innovation literatures.these systems are driven by information technology.The independent construct of TAM are perceived Diffusion of innovation modelsease of use and perceived usefulness while the Technology acceptance model (TAM)dependent constructs are behavioral intention to use Complexity (Rogers, 1962)and system usage. One of the limitations of TAM is Perceived ease of use (Davis, 1986, 1989)the assumption that the user is not contained by any Relative advantage (Rogers, 1962)factors such as personal ability to use the system, Perceived usefulness (Davis, 1986, 1989)lack of time, organizational issues, or environmental Innovativeness (Rogers, 1962)constraints. The TAM has been used and modified by Innovation characteristics (Agarwal and Prasad,several studies and has been proved to be a reliablepredictor of a person‟s acceptance of information 1997, 1998, 1999)technology (Gefen et al. 2003; Wang 2003; King and Compatibility (Rogers, 1962)He 2006). With respect to Internet usage, Chen et al. Compatibility (Agarwal and Prasad, 1998)(2002) equate usefulness to consumers‟ perceptions Observability (Rogers, 1962)that using the Internet will improve their shopping Perceived usefulness (Venkatesh, 2000)and information-seeking experience, while ease of Perceived risk (Ostlund, 1974)use refers to the amount of effort involved in online Not addressedshopping such as in clarity and navigation on the Societal issues (Black et al., 2001)Web pages. Subjective norms (Venkatesh and Bala, 2008) Table I. A comparison of various elements ofWhy need to integrate? diffusion of innovation with TAM The rapid increase in internet based serviceshas also attracted an increasing number of misleadingand fraudulent practices over internet (Baker, 1999). Hypotheses and model developmentDuring the last few years, these internet-based attacks TAM posits that the effect of externalhave been increased tremendously against users and influences such as system design characteristics ande-commerce systems. Researchers (So and Sculli, individual differences on the user‟s intention is2002; Rotchanakitumnuai and Speece, 2003; Cheng mediated by his/her perception about easiness andet al. 2006; Littler and Melanthiou, 2006) have usefulness of the new system (Davis, 1986). (havehighlighted many cases of the theft or fraud, breaches been done in organizational setting, it will beof personal privacy and attacks by hackers. Since interesting and worthwhile to see if their findings caninternet based services are operating in an open be confirmed in a consumer setting like acceptance of internet banking services.environment, their applications and outcomes arevulnerable to security threats such as phishingactivities, malwares, spywares, spoofing, and Perceived usefulness Nevertheless, the TAM has been chosen inpassword-sniffing, etc. (Vivo et al., 1998). However, this study to understand the customers‟ acceptance ofthe amounts at stake, and the buyer‟s subjectiveassessment of the chances of an unfavorable internet banking technology. In the context of userconsequence, determine the total amount of risk in acceptance of internet banking services, perceivedany purchase decision (Dowling and Staelin, 1994). usefulness could be because of transactions likeSome researchers have argued that online services online request for cheque/demand draft, sending monthly e-statements, online payments, etc. thatinvolve more risk than any other traditional improves performance, saves time and increasetransaction services (Tan, 1999; Martin andCamarero, 2008). Therefore, when someone uses effectiveness of service or some or several add-ononline services such as internet banking, his personal benefits such as bill payments, mobile recharge, may also be jeopardized. Though, there is These benefits are also expected to be further 210 | P a g e
  4. 4. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224enhancing over a period of time through implicit uncertainty around on-line transactions (Al-technological advancement or breakthrough. Many Gahtani, 2011). It has been found that threats ofresearchers have empirically proven that perceived hacking and phishing attempts can push users to optusefulness exert a significant and positive effect on out of various forms of participation in the internetattitude towards using IT or associated systems based services such as providing personal and(Venkatesh and Bala, 2008; Davis, 1989; Venkatesh sensitive information to web sites (Gerrard et al.,and Davis, 2000). So, we hypothesized that perceived 2006; Ndubisi and Jantan, 2003; Nor and Pearson,usefulness has a significant impact on individual 2008; Polasik and Wisniewski, 2009). The perceivedbehavioral intention to use internet banking services: risk associated with online transactions may reduceH1. Perceived usefulness has a positive and perceptions of behavioral and environmental control,significant impact on individual behavioral intention and this lack of control is likely to negativelyto use internet banking services. influence transaction intentions. However, consumers are likely to transact online if their risk perceptionsPerceived ease of use about behavioral and environmental uncertainties are Perceived ease of use is conceptualized as alleviated, so that they gain control over their onlinean individual‟s assessment of the mental effort transactions. The theory of reasoned action predictsinvolved in using the new technology (Davis, 1989). that consumers would be willing to transact if theirVenkatesh (2000) found several determinants of risk perceptions were low. Thus, we hypothesize that:perceived ease of use by integrating internal control H4. Perceived risk has a negative and significant(computer self-efficacy) and external control impact on behavioral intention towards use of(facilitating condition) into TAM. Various other internet banking technologies.studies (Davis, 1986, 1989) also pointed thatperceived ease of use can influence perceived Social influencesusefulness because other thing being equal the easier Social influence on technology acceptancethe technology is to use the more useful it can be. In behavior has been widely acknowledged. Most of thethe context of internet banking, research shows that previous works have emphasized on subjective normperceived ease of use has a positive and significant to understand the essence of social influence, but theyeffect on perceived usefulness (Philips et al., 1994; have got mixed results and its effect on technologyWang et al., 2003). Thus, customers are more likely has also been inconsistent. Venkatesh and Davisto accept the internet banking services if there is ease (2000) have found that social influence has only aof use in operation/process which can be instrumental significant impact on technology adoption underto the utilization of technology and contribute to the mandatory settings, and also that its effect moderatesindividual by reducing transfer costs and improving as users begin to have direct experiences with thework performance: target system. In addition, several researchers such asH2. Perceived ease of use has a positive and Conner and Armitage (1998) and Terry and Hoggsignificant impact on perceived usefulness to use (2000) have disagreed that the construct has limitedinternet banking services. conceptualization because it emphasizes only on theH3. Perceived ease of use has a positive and normative part of societal beliefs as opposed to widersignificant impact on behavioral societal contexts. Therefore, researchers haveintention to use internet banking services. expressed the need to further articulate the link between social influence and technology acceptancePerceived risk (Matheison, 1991; Karahanna and Limayem, 2000). Bauer (1960) has defined the perceived risk Whereas there is a direct relationship betweenin terms of the uncertainty and unfavorable subjective norm and intention in TRA and TPB isconsequences associated with consumers‟ based on compliance, TAM2 encompasses twoexpectation. It reflects the consumer‟s perception additional theoretical construct: internalization andabout the uncertainty of outcomes that pertain image (Venkatesh and Davis, 2000). In the presentprimarily to searching and choosing information of context, if a family member/friend/colleagueproduct and/or services before making any recommends that use of internet as a banking channelpurchasing decision (Cox, 1967). Perceived risk might be useful, a person may also believe that it isplays an important role of catalyst in many online actually useful, and in turn form an intention to use transactions (Ndubisi and Sinti, 2006; Research has shown that individuals are veryRotchanakitumnuai and Speece, 2003). If the receptive to social normative influences to ascertaincustomers find any difference in their actual buying or maintain a favorable image within a referenceexperiences and buying goals, they will perceive group. Drawing inferences from these two relatedhigher risk and in turn that perceived risk would be concepts, we hypothesized that social influences willdependent on the degree of subjective uncertainty of affect the individual intention to use internet bankingoutcomes. In online services, the spatial and temporal services. Thus we hypothesized that:separation between consumers and e-retailers and theunpredictability of the internet services generate an 211 | P a g e
  5. 5. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224H5. Social influences have a positive and significant should provide content information clearly in such aimpact on an individual behavioral intention to use way that is simple to navigate and has low level ofinternet banking services. complexity. It has been found that the perceived easeH6. Social influences have a positive and significant of use also determined on the internet banking webimpact on individual perceived usefulness of internet sites features such as web site connectivity, clarity ofbanking services. instructions, speed of upload and download, etc. i.e. Varadarajan and Yadav (2002, p. 297) have as internet bank services gives advantages to theirdefined the e-marketplace as “a networked consumers by allowing the customers to access theirinformation system that serves as an enabling banking accounts from any location and at any timeinfrastructure for buyers and sellers to exchange of the day (Agarwal and Venkatesh, 2002; Ndubisiinformation, transact, and perform other activities and Sinti, 2006). So, we hypothesized that:related to the transaction before, during, and after thetransaction”. . Hence we hypothesize that: H9. Well-designed web site has a negative andH7. Positive social influences have a negative and significant impact on perceived risk to use internetsignificant impact on perceived risk of using internet banking technologies.banking services. H10. Well-designed web site has a positive and significant impact on perceived ease of internetPerceived behavioral control banking technology use. In addition to attitudes and subjective norms(as suggested in Theory of Reasoned Action), theory Trustof planned behavior introduces the concept of Trust has been conceptualized as “trustor‟sperceived behavioral control, which originates from cognitive beliefs that results from observing theSocial Cognitive Theory (Bandura, 1977). Bandura trustee‟s action, and attributing the cause of the(1982) has decomposed these behavioral beliefs into behaviour to the trustee‟s internal trust-relatedtwo distinct constructs: self-efficacy and outcome characteristics” (McKnight et al., 1998). But severalexpectancy. He defined self-efficacy as the individual researchers such as Komiak and Benbasat (2004)belief about his or her capability to perform in a have viewed trust from the emotional point of viewcertain manner to attain certain goals (Bandura, 1977, and defined as the extent to which an individual feels1982). The outcome expectancy refers to a person‟s secure and confident about relying on the trustee.estimation that a given behavior will lead to certain Ennew and Sekhon (2007) have defined the trust asoutcomes. Recently, in their integrative model, “individual‟s willingness to accept vulnerability onFishbein and Cappella (2006) have found that both the grounds of positive expectations about theself-efficacy and perceived behavioral control are intentions or behavior of another in a situationsame. Moreover, they also suggest that perceived characterized by interdependence and risk.” Thisbehavioral control can also be assessed by same definition combines both the emotional as well asitems of self-efficacy. cognitive dimensions of trust. Therefore, consumer In IT usage context, self-efficacy can be trust could be described as a function of the degree ofconceptualized as computer self-efficacy (Venkatesh, risk involved in the situation and it is basically2000). Various studies (Ndubisi and Jantan, 2003; needful only in uncertain situations. Trust has alsoTaylor and Todd, 1995; Venkatesh and Davis, 1996; been shown to reduce the risk of being takenVenkatesh and Davis, 2000; Wang et al., 2003) have advantage of by e-vendor in online transactionsempirically supported the causal flow from computer (Yousafzai, 2010). Whereas research focuses on theself-efficacy to technology-specific perceived ease of relationship among trust, risk and intention the trustuse and also from computer self-efficacy to perceived literature and empirical evidence predominantlyease of use of internet banking technology in IT focus on industrial relationships, but theoretical andcontext (Wang et al., 2003). Thus we hypothesize empirical validation in B2C e-commerce is scarce.that: Indeed, Jarvenpaa et al. (2000) extended the inter-H8. Perceived behavioral control has a positive and organizational trust literature into consumer behaviorsignificant impact on perceived ease of use. in order to show that trust in an internet store reduces the risks of buying from that store. Trust in e-Web site design commerce reduces behavioral uncertainty and related In internet banking services, users interact risks associated with the possibility that an e-retailerwith the bank web site to perform their transactions might behave opportunistically. When people trustand thus the web site provides a platform where others, they assume that those they trust will behavecustomers can perform a series of actions to complete as expected, reducing the complexity of thetheir transactions successfully (Alhudaithy and interaction. Consumers tend to assume that a trustedKitchen, 2009). If the web site interface is poorly e-retailer will not engage in opportunistic behavior.structured, lacks security and clarity or includes noise Thus trust reduces the perceived risk. When an e-and distortion then transaction may be adversely retailer can be trusted to show competence, integrity,affected (Ganguly et al., 2009). Ideally, web site and benevolence, there is much less risk involved in 212 | P a g e
  6. 6. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224interacting with it. Moreover, a trusted e-retailer can trust or, irrespective of the ability to monitor orbe expected to take steps to reduce environmental control that other party”. This definition reflects anuncertainty and related risks associated with the element of risk: to place trust in another party‟sinternet infrastructure, reducing the environmental behaviour involves risk, particularly as such a beliefrisk associated with a focal transaction. In general, involves uncertainty as the trustor is unable totrust improves the consumer‟s beliefs about e-retailer confirm his/her decision outcomes prior toand the associated infrastructure, attenuating the performance (Doney et al., 2007). Three dimensionsperceived level of risk associated with the transaction of trust – benevolence, integrity and competence –process (Yousafzai, 2005, 2009). Hence, trust have been examined in various contexts includingreduces the risk involved in transacting with e- electronic banking when examining the placing ofretailer. Thus, trust in an e-banking institution such trust (e.g. Yousafzai et al., 2003). As identifiedreduces risk beliefs about on-line banking earlier, most research studies on IBS adoption havetransactions with that e-banking institution (see looked at trust and risk separately, see Table2. As canFigure 1). Hence, we hypothesize that: be seen, the trust perspective seeks to subsume risk. H11. Trust has a negative and significant impact However, without a clear distinction between truston perceived risk to use internet and perceived risk, detecting their relationship is banking technologies. problematic. Thus, a more precise framework is needed and this research seeks to develop such a framework, which can be tested. This will also then contribute to those Conte Authors Major Potentia xt findings l issues Percei Aldas- Higher The ved Manzano et levels of importan risk al. perceive ce of perspe (2009); d risk trust ctive Black et al. discoura is not (2001); ge explicitly Cunningha consume acknowl m rs edged. et al. from The (2005); banking relations Featherman online hip and Pavlou betweenFigure1 Research model (2003); trust and Littler and risk isLiterature review Melanyhiou underspe All trust, perceived risk, and behavioral (2006) cifiedintention are defined as multidimensional constructs Trust Kassim and Perceive Trust andthat are related to the individual, cultures and perspe Abdulla d risk risk havecontexts (Gefen and Straub, 2004; Mayer et al., 1995; ctive (2006); considere beenMitchell, 1999). The perceived-risk literature clearly Mukherjee d to be a identifiedemonstrates that absolute certainty is essentially and dimensio d atunheard of in consumers‟ daily decision-making Nath n of trust contextprocesses (Cunningham, 1967). This also reflects (2003); dependeBauer‟s (1967, p. 24) proposition that “consumer Rotchanakit nt andbehaviour involves risk in the sense that any action of umnuai asa consumer will produce consequences which he and Speece distinctivcannot anticipate with anything approximating (2003); Suh ecertainty, and some of which are likely to be and Han constructunpleasant.” This clearly implies that any decision- (2002) smaking involves some kind of risk and consumers (Hallidayhave to cope with risk on a day-to-day basis (Jacoby , 2003;and Kaplan, 1972; Roselius, 1971). Trust is not as Harridgeclearly defined in the literature. However, Mayer et -March,al.‟s (1995, p. 172) define B2B trust as “the 2006)willingness of a party to be vulnerable to the actions Risk Kim and Risk and Trust is aof another party based on the expectation that the and Prabhakar trust are significaother will perform a particular action important to the trust (2004); suggeste nt 213 | P a g e
  7. 7. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224 Perspe Yousafzai d to be antecede 1999 as cited in Lim, 2003). . ctive et al. tested nt of  Three of them perceived risk and trust have (2003) simultan perceive a direct impact on trusting behaviour (Kim and eously d risk. Prabhakar, 2000). Risk, Tao Risk, A  Trust ,behavioral intention have an impact trust, Zhou(2010) trust, significa on perceived risk (Cheung and Lee, 2001 as cited in and , Anita intention nt Lim,2003). intenti Lifen are relations  Perceived risk, trust, and behavioral on Zhao(2009) suggeste hip intention are dependant on each other (Mitchell, perspe and Ankit d to be between 1999). ctive Kesharwani tested trust, (2011) simultan perceive In line with Mayer et al.‟s (1995) proposition on eously d risk placing trust in a party (or a company) and trusting and that behaviour, in our context, this implies two both are assumptions: the respondents will assume a risk crucial in exists when deciding to use IBS and they will take explainin the risk when they decide to trust in their bank‟s g the ability to deliver on its IBS promise. technolo gy Conceptual trust-risk-intention model in IBS acceptan The preceding discussion leads us to ce and hypotheses development within the current context. internet Here trust, perceived risk , and behavioral intention banking are shown as distinctive, though connected behavior constructs, with trust influencing the degree of al perceived risk. In addition, the issue of “competence” intention is identified as the result of trust and in itself then hasTable II. A snapshot of recent IBS adoption studies the potential to influence perceived risk. This relationship helps underscore the potentially complex studies that have attempted to examine the interplays at work in such investigations. It alsoconstructs simultaneously, where there has been presents one possible interpretation of the issueslimited empirical work in the main. Furthermore, detailed in the literature and provides an initialgiven that little research has been done in the Chinese concept for confirmatory testing.context, and that this lack of up-to-date knowledgehas been well documented (Laforet and Li, 2005) theresearch also make a contribution in developing anunderstanding of this developing market. Given theimportance of the market and its potential forbanks‟business expansion, an insufficientunderstanding of the context can lead to strategicfailure. As the literature does not provide us withclear guidance (Mayer et al., 1995, p. 711), it is ofmanagerial importance for banks (international onesin particular) to understand whether perceived risk isan antecedent of trust or should trust be considered asan antecedent of perceived risk. Clearly, therelationship among risk, intention, and trust could be Figure 2. Conceptual trust-risk-intention modelinterwoven, especially when the trustor has to dealwith uncertainty or what are perceived to be The literature suggests that whenuncontrollable factors such as the internet, which as a considering whether or not to adopt the internet as atechnology has the potential to fulfil or break the marketing channel, the more risk a consumerbank‟s promises (Yousafzai et al., 2003). perceives, the less likely he/she will buy onlineUnderstanding this relationship can help bank (Forsythe and Shi, 2003). Thus, the first hypothesismanagers better predict consumers‟ IBS adoption and states:provides useful guidelines to reduce risk and enhancetrust. A number of relationships have been H1. Consumer perceived risk in online bankingsummarised based on previous work (Lim, 2003): negatively influences their usage intention. Perceived risk acts as a mediator between Two types of trust are important whentrust and willingness to buy (Stuart, investigating the adoption of online banking: trust in 214 | P a g e
  8. 8. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224the bank and trust in the e-channel (Stewart, H5. Consumer trust in the banks‟ ability to provide1999). Approaches such as being loyal to a brand or a online banking services has a positive effect on usageservice provider that is known and can be trusted are intention.commonly used, especially in online contexts where Methodologythe interaction between buyers and sellers is low Research design overview(Chen and He, 2003; Huang et al., 2004). Online This research was undertaken in two stagesbanking is delivered by a financial institution rather combining quantitative and qualitative approaches.than an individual, thus, consumers‟ trust in a bank is Using a self-administered questionnaire, theexpected to be predominant. Trust in banks in a quantitative design enables an in-depth examinationgeneral context is an antecedent of perceived risk of Chinese consumers‟ perception of risk and trust.because account holders will not put themselves into This also allows us to explore the underlyinga vulnerable situation if there is a lack of trust or the relationship between risk, trust and consumers‟ usagebank cannot be trusted. Northern Rock is a good intention. The questionnaire was pilot-tested andexample. After the media exposed its financial crisis some semantic changes made. to such sample (Cui(BBC, 15 September 2007), the bank‟s account and Liu, 2000; Dickson et al., 2004; Lu et al., 2005;holders‟ confidence was devastated and many chose Roy et al., 2001; Walters and Samiee, 2003). Toto queue up to withdraw their money. This clearly address these issues, adopting a conveniencedemonstrates that trust in a bank is a vital element in sampling was deemed practical. The final version ofrelation to financial services. This notion is supported the questionnaire was distributed to four universitiesby Yousafzai et al. (2003) who propose that in online in Guangdong Province. The sample covers a widebanking, less risk will be involved when the bank can range of students (one highly competitive university,be trusted. two local universities and one polytechnic college).H2. Consumer trust in the bank reduces their This selection method helps avoid Quantitativeperceived risk related to the online banking services. research and sample A convenience sample of Chinese university students was considered Furthermore, trust in banks‟ competence in appropriate. These consumers inherently have greatdelivering IBS is contextualised and this belief may potential to adopt technological or innovativebe an outcome of trust in a bank more generally. products such as IBS; being young and familiar withTrust in a bank‟s competence is transferred to the computers as well as the internet. This group ofchannel – the internet – through which banks deliver consumers could be identified as a group of IBS earlyfinancial services and keeps their IBS promises. adopters in China. Also, university students areHowever, the internet is open to the public and banks suitable for concept development (e.g. Alturas andhave no ownership or control of the channel. Santos, 2004; Dholakia, 2001; Featherman andConsequently, it is reasonable to propose that Pavlou, 2003; Laroche et al., 2003). Finally,consumers need to be willing to trust in the banks‟ challenges have been identified when implementingcompetence in delivering IBS, in order to decrease primary research in China, for example the difficultytheir risk perception. Thus, it is expected that of defining a meaningful sample of “Chineseconsumer trust in banks will be positively related to consumers” and the access potential bias due to non-their trust in the bank‟s competence in delivering IBS probability sampling and achieves a balance betweenand simultaneously be inversely related to risk the difficulty of defining a representative sample andperception regarding the IBS system. This leads to the use of a convenience sample. In total 900 tudentsthe following hypotheses: were contacted. A total 504 out of the 836 returned responses were completed, a completion rate of 56H3. Consumer trust in the bank‟s competence to per cent, this rate was achieved by using an in-lectureprovide online banking services reduces their online distribution and collection strategy. Among thesebanking risk perception. valid responses, there are 490 internet users (97.2 perH4. Consumer trust in the bank has a positive effect cent) and 14 non-users (2.8 per cent). Most of theon perceived competence to provide online banking internet users are currently IBS non-users (88.2 perservices. cent) and only a few of them state that they are IBS users (11.8 per cent). The group of current IBS non- Based on Mayer et al. (1995), it is expected users is eligible and form the sample for this researchthat when consumers‟ trust in banks is sufficient and (n ¼ 432). Most respondents are young (99.1 per centexceeds their risk perceptions in relation to IBS, are 18-25) and the sample is reasonably evenlyconsumers will be more likely to adopt IBS. Research divided between the genders with 186 males and 246has shown that a significant link exists between trust females (43.1 per cent and 56.9 per centin the e-channel and the adoption of internet banking respectively). Whilst the use of a student based(Kim and Prabhakar, 2004). Thus, this leads us to sample is appropriate, it must also be acknowledgedsuggest: that this does limit the generalisability of the findings and therefore acts as one of the study‟s potential limitations. 215 | P a g e
  9. 9. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224 (Kaiser and Rice, 1974) and Bartlett‟s Test of Sphericity also reached statistical significance (p # 0:001) (Bartlett, 1954). In accordance with the KaiserScale development criterion, only those factors with eigenvalues greater Perceived risk is defined as a concept than 1 were retained for further analysis (Hair et al.,composed of multiple dimensions and dual 2006). Three factors were identified explaining 56.3components. This means that risk has been measured per cent of the variance after Varimax rotation(Tablein terms of uncertainty and consequences, which are III).then multiplied. Previous work has shown thevalidity of these components (Cunningham, 1967; Variables StatementsMitchell and Boustani, 1994; Verhage et al., 1990b) Control System Functionalityand are particularly recommended for examining riskin the service context (Boze, 1988; Guseman, 1981; risk risk riskMitchell and Greatorex, 1993). Thus, the measure FinRisk 1 I will lose moneyhelps us maximise result comparability to existing the 0.636Western literature. In this study, the overall perceived FinRisk 2 I will lose control of my bank accountrisk was measured on a multidimensional scale 0.727covering security, performance, privacy and finance FinRisk 3 My money loss will not be covered byconcerns. The decision is in line with previous the 0.523research, which demonstrates that perceived risk in Bankinternet banking is mainly determined by these risks PrivRisk 1 Others will know my personal details(Aldas-Manzano et al., 2009; Littler and Melanthiou, 0.6212006; Yousafzai et al., 2003). Although conceptually PrivRisk 2 Others will misuse my datarisk dimensions are distinct, empirical studies also 0.622show that a number of these dimensions (such as PrivRisk 3 I will lose control of my personal datapsychological and social) are highly correlated and 0.753are combined as a single measure, depending on the PerfRisk 2 IBS will not work as I expectcontext (e.g. Jacoby and Kaplan, 1972; Kaplan et al., 0.5701974; Mitchell and Greatorex, 1993). This context- PerfRisk 3 The internet banking services will havedependency implies that perhaps in reality, some technical problemsrisks are difficult for consumer to distinguish. Thus, 0.758in a different context it might be appropriate to PerfRisk 4 I will have to be careful when I use IBScombine some of the other risk dimensions if this because I need to ensure I don‟t makehelps to achieve a more meaningful discussion. The mistakes 0.549items were derived from the literature (and where SecRisk 2 Fake internet banking web servers mayappropriate based on instruments previously used in bethe studies outlined above) and adapted to the current shown onlinecontext on the basis of exploratory interviews 0.546(Corbitt et al., 2003; Featherman and Pavlou, 2003; SecRisk 3 Internet banking systems can beLim, 2003). These interviews where conducted at an attacked 0.751initial stage and used simply to assist in the PerfRisk1 IBS will not work properlyverification of the constructs to be included in the 0.828questionnaire. A four-point Likert scale was applied SecRisk 1 The internet banking system is notto the risk measures (1-4, “very certain” to “not at all secure 0.808certain” and “very serious” to “not at all serious”). % of variance explainedThis decision stems from previous studies on 22.55 20.14 13.59Western consumers (Cunningham, 1967) and cross- Initial Eigenvaluecultural settings (Hoover et al., 1978; Verhage et al., 5.11 1.16 1.061990a). Also, the scales were operationalised and Cronbach‟s alphafound appropriate within service contexts (Mitchell 0.81 0.74 0.72and Greatorex, 1993). The components weremultiplied to form a new scale for each risk variable Notes: Extraction method: Principal Component(Yates and Stone, 1994). Before a detailed evaluation Analysis, Rotation method: Varimax with Kaiserof the data, an exploratory factor analysis (EFA) was Normalization. Rotation converged in six iterationsapplied to the 13 risk variables to reveal theunderlying dimensions of perceived risk in our Table III. Perceived risk dimensionscontext. An examination of the results indicates thatthe data is appropriate for EFA. The Kaiser-Meyer- The first factor contains finance and privacyOlkin (KMO) measure of sampling adequacy risk and is concerned with a loss of either moneyexceeds, at 0.895, the recommended value of 0.6 and/or personal details. It can thus be interpreted as 216 | P a g e
  10. 10. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224“control risk”. The second factor is concerned with Cronbach‟s alphaspecific security and performance risks and is named 0.6 0.73“system risk”. The last factor comprises just twovariables that relate to general functionality risks of Notes: Extraction method: Principal componentIBS use and is thus called “functionality risk”. IBS is analysis, Rotation method: Varimax with Kaiserregarded as risky as it is difficult to ensure its Normalization. Rotation converged in threeoperation especially as the respondents had no prior iterations. Perceived-risk variables were adoptedexperience of using online banking. Lim (2003), for fromexample, reported that in the context of online Corbitt et al., 2003; Featherman and Pavlou, 2003;shopping respondents worry about technology as they Lim, 2003 and our exploratory research;have no idea about the seller, they are also concerned Table IV Trust dimensionsabout whether a safe process is created andmaintained for payment (these dimensions were also Usage intention is measured on a single item scalesupported by the results of our qualitative research). asking respondents to indicate their likelihoodTrust can be defined as a concept composing of adopting IBS. This measure was adapted from Phauintegrity, benevolence and competence. These and Poon (2000) and tailored to our contextdimensions are often suggested to contribute to trustin the contexts of B2B (Mayer et al., 1995) and B2C Qualitative research(Gefen and Straub, 2004). The EFA conducted on the After the questionnaire distribution,trust variables revealed two factors explaining 61.9 participants were also invited to join focus groupper cent of the variance (KMO $ 0:06, Bartlett‟s Test interviews. In total, 27 respondents took part in sixof Sphericity # 0.000). The results are displayed in mini-group interviews (three groups of males andTable IV and show a clear division between trust in three groups of females) and each lastedthe institution and trust in the bank‟s competence to approximately 50-90 minutes. Guided by theprovide IBS. This is in line with the literature (see literature, respondents were encouraged to discussKim and Prabhakar, 2004; Stewart, 1999; Yousafzai their reasons for not using IBS and to indicate theiret al., 2003). Nooteboom et al. (1997) broadly concerns in terms of China‟s IBS development. Theclassify trust into competence and intentional trust. interviews were tape-recorded and fully transcribed.Furthermore, in the context of investigating the The qualitative design helps enrich the discussion ofadoption of internet banking, competence trust is the quantitative results and explore informationcrucial for trust in the electronic channel, whilst trust “masked” by the quantitative approach. A series ofin the bank providing IBS is intentional trust as the steps were applied to analyse qualitative data;customer is vulnerable to consequences when including categorisation, data rearrangement andengaging in trusting behavour (Kim and Prabhakar, reduction, relationship recognition and additional2004). categories formation (Rudestam and Newton, 2001; Saunders et al., 2003). Firstly, categorisation is usedVariables Statements to understand the statements and establish meaningsTrust in IBS within our current context. The literature was used as the guide to “categorization themes” and generate anBank completeness overall picture of our respondents. Secondly, dataIntegrity1 My bank is honest was rearranged and reduced into a more manageable0.859 form, guided by the literature and the purpose of theIntegrity2 My bank will keep the promise it research, to identify related ideas or discussions formakes 0.831 broad theme development. Finally, relationships andBenevolence1 My bank puts customers‟ interest additional categories were identified. This step wasbefore its own 0.632 important to analyse the reorganised data and toBenevolence2 My bank demonstrates its belief that generate key themes, patterns, or relationships. A“the customer number of “themes” in relation to China‟s IBS were is always right” identified; these are reported after the results of0.546 quantitative data.Competence1 My bank is competent in carrying outits online Results banking transactions The Structure Equation Modelling (SEM)0.781 approach was adapted to validate the proposedCompetence2 My bank knows how to provide structural framework. This approach was chosen as itexcellent IBS 0.840 can explore and test simultaneous hypothesised % of variance explained causal relationships among multiple variables35.99 25.9 (Joreskog and Sorbom, 1979). Furthermore, SEM Initial Eigenvalue permits us to estimate the strength of2.603 1.111 interrelationships between our latent constructs 217 | P a g e
  11. 11. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224(Gallagher et al., 2008). The data was analysed using Comparative Fit Index (CFI)AMOS Version 6. The model sought to validate the 0.935 0.932hypothesized relationships shown in Figure 3. Goodness of Fit Index (GFI)Measurement reliability and validity of the final 0.936 0.933model was examined using confirmatory factor Incremental Fit Index (IFI)analysis (CFA). Behavioural intention as a single 0.936 0.933item measure was excluded from the CFA analysis. Root Mean Squared Error of ApproximationThe initial model used for CFA led to the deletion of (RMSEA) 0.055 0.053the following items: RiskPerf2 and Benevolence2 TableV. Model fit indicesdue to low loading estimates of below 0.5 (Andersonand Gerbing, 1988). Construct reliability of perceivedrisk and trust was tested using Cronbach‟s Alpha.The final scales for “risk” and “trust in bank”demonstrate high internal consistency withCronbach‟s alpha values exceeding Nunnally‟s andBernstein‟s (1994) recommendation of at least 0.7.The factor for “IBS competence” comprising onlytwo items reached the level of 0.6, which isacceptable for exploratory studies. The finalmeasurement model achieved an acceptable fit to thedata on the basis of a range of commonly used fitindicators. As shown in TableV, the CFI, GFI and IFIvalues are all above 0.9. The RMSEA of 0.057 isbelow the 0.06 value thus indicating a good fit (seeHu and Bentler, 1995). Furthermore, the ratio of thechi-square value to the degrees of freedom was 2.395 Figure 3 :Structural trust-risk-intention modeland thus within the recommended range of 1 to 3 (seeCarmines and McIver, 1981). We tested the proposed It is interesting to note that respondents‟conceptual model (as shown in Figure3) using SEM. belief in the competence of the bank in carrying outThe results indicate that the hypothetical model IBS does not necessarily reduce their risk perceptionsprovided an acceptable fit to the data as demonstrated of internet banking. Therefore, hypothesis H3 is notby the SEM model fit indices in TableV. Figure3 supported (H3, p . 0:05). The quantitative resultsshows the structural path parameter estimates for the clearly demonstrate that trust in the bank is a keymodel. In relation to the hypotheses, perceived risk influence in persuading Chinese consumers to usehas a significant negative effect on behavioural IBS. Figure3 shows that two pathways exist betweenintention to adopt IBS, supporting H1 (ß ¼ 20:163, p trust in the bank and Chinese consumers‟ intention to, 0:05). Results also evidence the key role of trust in use IBS. First, by increasing trust in the bank it willthe institution on the usage intention of adopting reduce the perceived risk of IBS and thus positivelyinternet banking. As we expected, the higher the trust influence the intention to use IBS. Second, throughin the institution the lower the perceived risk in increasing the trust in the bank it will positivelyinternet banking (H2, ß ¼ 20:384, p , 0:001). influence consumers‟ perception of the bank‟sFurthermore, the results indicate that trust in the bank competence in providing an IBS service which inhas a significant positive influence on the trust in its turn will influence them positively towards the use ofcompetence in operating IBS supporting H4 (ß ¼ IBS. However, the lack of relationship between the0:444, p , 0:001). This competence in internet perceived risk involved in using IBS and thebanking will then significantly increase the perceived IBS competence may well be explained byprobability of adopting the internet as a banking the overall lack of trust thatchannel (H5, ß ¼ 0:133, p , 0:05) would have appeared to exist in the bank. This will be discussed further below. Model fit indicesCFA model SEM model Integrating the quantitative and qualitative Chi-Squared (x 2) results258.7 282.5 The qualitative interviews revealed that Degrees of Freedom (df) there is a general lack of trust in the banking system.113 128 Of particular concern was how banks would deal x 2/df with the situation when a customer encounters2.29 2.21 financial loss through using IBS. They were Probability level (p) 0.000 0.000Number of uncertain whether the bank would cover orobservations 432 432 218 | P a g e
  12. 12. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224compensate for any money loss. This uncertainty was involves no face-to-face interaction, this remoteparticularly prominent with the female respondents: nature is related to observation and trust-building. I am not sure how banks will solve When the respondents were probed further in anproblems, particularly when money loss is involve attempt to identify their understanding and(Female g1) knowledge regarding consumer rights and IBS Money loss is related to redress issues. The bank regulation, three barriers were identified:should follow my case [e.g. inquiry]. If it‟s not my (1) a lack of understanding regarding online bankingfault [i.e. I am not responsible for the loss] that I have users‟ rights;lost account funds, banks should compensate me (2) a perceived lower development of IBS in China(Female Group 3). when comparing it with IBS provided byIn general, if the loss is small, then I wouldn‟t worry international banks;that my bank would neglect my case [as] it is a big (3) and, an unexpectedly low level of involvement bybank. But, if the loss is big, then I‟m not sure what the government in regulating and monitoring thethe bank will do (Female Group 2). banking system. The last comment highlights the issue of When exploring the factors underlying this“problem scale”. If a problem is small, the lack of trust in the bank, the qualitative research alsorespondents do not view it as significant. However, supports the quantitative data and shows that there iswhen encountering a larger financial loss, they are a serious concern about security issues, namelymuch less confident in the bank‟s response and the hackers, computer viruses and the risk of loggingbank is seen as less trustworthy. This concern for onto a fake web site. I still feel [IBS] is not safemoney loss is also expressed by male respondents, enough – hackers are just too smart nowadays. Thisbut responsibility in such situations is, importantly, is similar to the case that if you do not want to bequestioned. Of course I worry. Where shall I attacked [online] by [a] virus, the only thing [that youcomplain if anything goes wrong? I fear that my could do] is not to use the internet. You can imaginemoney may be stolen. What can I do? Where and how “secure” the internet is! And your onlinewho shall I report and complain to? The banks are banking is sitting there [on the internet] all the time!owned by the government; banks launch this service. (Male Group 2) I still have concerns regardingShall I complain to the government? If I lost a large security. You know, the records of IBS are digitalamount of money, what shall I do? Who is going to data. If there is anything wrong, anything couldbe responsible for the loss? The bank might say, happen, e.g. data loss . . . (Male Group 3). . . . I don‟t„Well, it is your personal business. You decide to put think [IBS] it‟s perfect . . . IBS uses computers foryour money into our bank. We have no knowledge [transaction] recording. I‟m not quite sure whetherabout how you do it [i.e. use online banking]. You my money would be “edited” by some kind ofcould be careless when you use the service so that computer virus. If [the saving figure] is increased,others may access your account and steal your that is good. But if it is decreased, then it is my loss. Iaccount information and password, then money loss will be very depressed and not sure what I shall do.etc. do you have any evidence to prove yourself?” What happens, if [the account] is attacked by(Male Group 2). An old Chinese stereotype seemed hackers? They can remove my money [from theto exist whereby banks are still perceived as being account] and I will have money loss. I still worry thatgovernment owned and controlled, although in when I use IBS, if somebody steals or knows myreality, many state-owned banks have become PLCs password, he/she can take my money [out of my(e.g. Bank of China, Industrial and Commercial Bank account] straightaway, then I have money lossof China). This link between the government and the (Female Group 1). The quotations clearly show thatbanking system, which is, dissimilar to Western IBS is seen as a high-risk service that containseconomic models, needs to be considered when several uncontrollable elements, any of which couldestablishing Chinese consumers‟ trust-building lead to money and/or privacy loss. Furthermore, thisstrategies. The female respondents, interestingly, perception of riskiness is exacerbated by the media,pointed out that they were not sure how they could which report negative news on IBS security, systemsshow the banks that they were not responsible for the and databases. This was summed up by one of theloss, something the male respondents did not respondents when she commented: I am aware of theconsider. No evidence [e.g. payment receipt] can news that some people with professional computingprove my online transactions [referring to IBS online knowledge use viruses to attack bank databases,payment]. I do not feel solid. I am not sure whether access bank accounts, remove the funds in thethe money has been made or not. But, if you go to a account and change the data in the bank systembank, the proof [i.e. receipt] will be given [to you] . . (Female Group 3). All these individual elements of. (Female Group 2). One of my interests – actually risk combine together to create a service that isconfusion – is how to gather evidence to prove/verify perceived as high risk by Chinese consumers and thisthe online transaction that you have made if any contributes to their lack of trust in both the banks andconflict occurs (Female Group 2). Thus, as IBS their internet Banking Services. Thus, appropriate 219 | P a g e
  13. 13. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224and effective trust-building strategies in relation to through the staff, they would have less knowledgeboth the bank and IBS are necessary for the and experience of the bank‟s internet bankingsuccessful growth of IBS in China. Initially, processes and would rely more on friend‟s experiencetherefore, we need to consider alternative trust- and the media. Here, whilst the respondents may wellbuilding processes identified in the literature to help be familiar with the internet generally, many may notus develop suitable strategies before drawing our have bought online or managed services through thisconclusions. mechanism. There are also the predictions that customers might hold of their banks ability toDiscussion effectively manage an online offer – perhaps raising It can clearly be seen from the evidence concerns of bank competence within this operatingpresented here that trust is a key issue in determining environment. Interestingly, linked with the predictivethe future adoption rate of IBS in China. This trust, or basis of trust development, Tyler (1989) identified alack of trust, directly links to the level of risk number of factors that are positively related to theperceived by these potential IBS customers and perceptions of fairness in interactions withrelates to both trust in the bank, as well as trust in the authorities. One of these factors, “standing” refers tointernet banking channel. It is also worth noting that “the treatment accorded to people by groupsome gender differences exist, suggesting that the authorities . . . issues of politeness, respect for rightsinfluence of trust and perceived risk need careful and and treatment with dignity” (Tyler, 1994, p. 853).specific consideration in relation to different possible This would appear to be particularly relevant in thiscustomer groups. With this in mind, the importance research context. Lewicki and Stevenson (1997) citedof appropriate trust-building processes becomes three factors related to the development ofcritical to the future success of IBS in China. Three identification-based trust:trust-building processes have been developed in the (1) similar interests;literature: calculative, predictive and identification (2) similar goals or objectives; and(Lewicki and Bunker, 1995). The calculative (3) common values and/or principles.perspective of trust was developed in economics(Williamson, 1997) and sociology (Coleman, 1990). Whilst similarity of values is a good way toIt focuses on a process where costs and benefits of assess the fit or cultural blending of alliance partnersbehaviour are rationally compared. More specifically, (Das and Teng, 1998), value congruence is a centraltrust emerges when a bank customer perceives that a concern in gaining a successful fit betweenbank‟s cost of cheating or engaging in opportunistic individuals and organisations (Chatman, 1991).behaviour are greater than the benefit of such actions Indeed, Morgan and Hunt (1994) found that shared(Doney and Cannon, 1997). It has clearly been shown ethical values are positively related to trust inthat opportunism is inversely related to trust – where marketing relationships and dissimilarity of valuesopportunistic behaviour reduces the level of trust and goals has been found to have a negative effort on(Yilmaz and Hunt, 2001). In this context, cheating or trust development (Anderson and Weitz, 1989) andopportunistic behaviour can also be displayed by trustworthiness (Smith and Barclay, 1997). Differentthose outside the bank‟s control, but “privy” to the contexts involve different types of activities andchannel for example hackers. Here, the control of distinct levels of interactions that may make certainsuch activity is not entirely in the hands of the bank – bases of trust less applicable (Hagan and Choe,and the question arises; do customers trust in the 1998). Different contexts, interactions and relationalbank‟s ability to circumvent cheating and forms also have different types of risk and requireopportunistic behaviour in others? The notions different mechanisms to reduce risk (Sheppard andproposed in the calculative perspective centre on the Sherman, 1998). Thus, it is likely that a bankassumption that the “entity” in which trust is to be personnel-customer interaction context shouldplaced is unitary, it has singular control of possible consider different trust building bases and risk levelscheating and opportunistic behaviour. In terms of this than that involved in a bank-customer relationshipresearch context this is not evident as the bank does mediated by the internet service. Indeed, currentnot have full control, and must itself place trust in literature distinguishes between various bases forother factors to deliver the service. Perhaps, the only trust (calculative, predictive and identification),aspect where the bank does have control related to which occur from different types of interactionopportunism might be in terms of the management of (Lewicki and Stevenson, 1997). For example, Koehnsystems of redress in the event that something did go (1997) suggested that calculative trust developmentwrong. The predictive basis of trust development processes should be the main sources of trust ininvolves the ability of individuals to predict the commercial exchanges, whereas, in channelactions of others (Deutsch, 1960). The ability to relationships, opportunism may be the mostpredict behaviour comes from interaction with, and important predictor of trust (Morgan and Hunt,observation of, the other party (Lewicki and Bunker, 1994). There is perhaps additional complexity in this1995). Whilst the respondents have certainly research context as trust development processes ininteracted and observed the behaviour of their bank relation to IBS exists in a “duality” borne out of the 220 | P a g e
  14. 14. P.Salmanraju, A.Rakesh, Ms. N. Bhagya Laxmi / International Journal of Engineering Research and Applications (IJERA) ISSN: 2248-9622 Vol. 3, Issue 1, January -February 2013, pp.208-224interwoven entity that is internet operation – the predictive basis of trust development, whichorganisation, legality, channel, monitoring and involves the ability of individuals to predict thesecurity systems. This leads to another potential risk actions of others. It is apparent from the data that the– one of “ownership” – do customers trust in a respondents felt that they could not predict the“thing” (person, organisation or brand for example), behaviour of the banks generally, and thisif that singularity does not exist what does that mean exacerbated the problem, and increased the risk, infor any of the possible bases for trust? This is perhaps adopting IBS. This was further complicated by mediaan issue faced by those operating in “mediated” stories involving hackers and computer viruses. Theenvironments where the potential involvement of predictive basis of trust development involvesvarious external players might affect the delivery of customer interaction and observation of the bankthe service in ways that would not be found in stand staff. Perceptions of fairness are key and issues ofoperational formats. In such complex situations “respect for rights and treatment with dignity” (Tyler,gaining trust is a critical factor, but to do this banks 1994) are customer priorities if trust is going to bemust think beyond those aspects that are controlled built by the banks – a pre-requisite for successful IBSand owned in terms of their own service delivery and adoption by customers. Until banks can convince thewiden consideration to include aspects brought customers that their behaviour will be in the bestthrough the channel itself and its particular interest of the customer, and this is predictable, trustcharacteristics. It is suggested that as trust in the bank will remain at a level where IBS adoption will beis the pre-requisite of both pathways to increase the perceived as too risky. It would appear that currently,behavioural intention of using IBS, this should be the there is still some way to go before Chinesemajor focus of any trust-building strategies. consumers engage with IBS.However, in creating such trust-building strategies,they will inevitably be linked with the requirement of Future researchthe IBS system. Thus, we suggest that banks have to The framework established in our researchpublish a data protection policy, which has to be should be examined in a wider context to verify itssupported by the government as many consumers link application. However, future research should bear inbank ownership with the government, which is a mind that there is an extensive discrepancy withinuniquely contextual Chinese variable. Secondly, China (e.g. huge economic difference between urbanbanks have to credibly demonstrate their willingness and rural areas). As this framework is developedto refund financial losses incurred by internet among those who are from cities, we suggest it needsbanking users and to be accommodating in disputed to be tested in China‟s other similar regions such ascases. This is particularly important in dealing with ShenZhen that share large commonalities in terms offemale Chinese consumers. Finally, banks should economic development and consumers‟ values. Inguarantee that personal data are protected and not addition, more care (e.g. additional measures) shouldused against the wishes of the users and their be considered when measuring the concept of trust inanonymity is thus guaranteed. bank as it has a relatively low reliability in the current context. However, it is also important toConclusions and future research validate the measures with exploratory research. It is undoubtedly the case that the Moreover, the use of student sample limits therespondents lacked trust in the banks in China (or generalisability of our research. Thus, future researchtheir ability to manage internet operations and this is may test the model among other population (e.g. IBSparticularly reflected in their concerns over how their adopters). This helps establish validity and reliabilitybank would manage a serious financial loss by a of the model as well as generalisability. Finally,customer). This is further confounded when another future direction could compare the modeltechnology is introduced to mediate this interaction, between male and female respondents. This helps usas in IBS, when additional issues of hackers and detect whether gender plays a significant role in riskviruses become relevant. There is certainly a need for perception; if so, what is the impact on otherappropriate trust-building strategies to overcome this concepts identified by the model such as trust in bankmajor barrier to IBS adoption. It is unclear whether and trust in IBS competence.the respondents felt the banks would actopportunistically and therefore calculative trust Referencesbuilding strategies may not be appropriate, except 1. Aladwani, A.M. (2001), “Online banking: aperhaps in relation to redress strategies. Similarly, field study of drivers, developmentidentification based trust-building strategies are more challenges, and expectations”, Internaldifficult to specify, although shared ethical values Journal of Information Management, Vol.between customers and banks should raise levels of 21 No. 3, pp. within the relationship. However, it is worth 2. Aldas-Manzano, J., Lassala-Navarre, C.,noting that the respondents were more inclined not to Ruiz-Mafe, C. and Sanz-Blas, S. 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